Indonesia Sets Sights on Becoming Southeast Asia’s Leading Electric Vehicle & Battery Hub

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• 30 October 2024
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Indonesia has declared its ambition to become the largest electric vehicle (EV) and EV battery hub in Southeast Asia, a move highlighted by the opening of the region’s first EV battery manufacturing facility last July, according to vietnamplus on 28 October 2024.

This pioneering plant, a USD 1.1 billion joint venture between Hyundai Motor and LG Energy Solution from the Republic of Korea, is strategically located in West Java to position Indonesia as a central player in the EV supply chain across Southeast Asia.

Fransiscus Soerjopranoto, Chief Executive of Hyundai Motors Indonesia, stated that the plant will significantly advance Indonesia’s presence in the EV sector, aiming to become one of the top three EV battery producers globally.

However, despite the ambitious vision, investment in the sector has been modest, and much of the country’s refined nickel—an essential EV battery component—still comes from imports, primarily from South Korea and China, due to limited domestic refinement industries.

As the country holds the largest nickel reserves worldwide and substantial iron, copper, and bauxite resources crucial for battery production, Indonesia is uniquely positioned to become a leader in this market.

The government has launched various incentives, including tax exemptions, to boost domestic EV sales and support local manufacturers amid rising competition from imported vehicles.

However, Putra Adhiguna, Executive Director at a research institute, expressed concerns that Indonesia’s reliance on the global battery supply could present challenges in drawing further investment for its EV ambitions. The government’s steadfast support for developing local production facilities is hoped to gradually alleviate this dependency, transforming Indonesia into a regional powerhouse for EV and battery manufacturing.

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